The present application is an ongoing project that will identify the molecular mechanisms responsible for osteoclast (OCL) inhibition by OCL inhibitory peptide-1 (OIP-1/hSca 1). During the previous proposal period, we have identified the OCL Inhibitory Peptide-1 (OIP-1/hSca), a local factor produced in the bone microenvironment as a novel inhibitor of OCL formation and bone resorption that is produced by OCLs. OIP-1 is a glycosylphosphatidyl-inositol (GPI) linked membrane protein (17 kDa) related to the Ly-6 family of hematopoietic proteins. We have determined that the OIP-1 c-peptide region (32 amino acids) of OIP-1 is critical for OIP-1's inhibition of OCL formation. Synthetic OIP-1 c-peptide inhibits OCL formation through suppression of TRAF-2 and p-c-Jun kinase activity, but has no effect on TRAF-6 and NF-kappaB activation. We also found that cytokines such as IFN-gamma, and IL-1beta significantly enhance OIP-1 mRNA expression in OCL precursors, CFU-GM. It is our hypothesis that OIP-1 plays a critical role in the physiologic regulation of OCL development by cellular signaling through unique transmembrane protein interactions and that OIP-1 expression in OCL precursors is controlled by specific transcriptional regulatory mechanisms. To test this hypothesis, we will pursue the following Specific Aims: Aim (1) Identify and clone the osteoclast transmembrane proteins which interacts with the OIP-1 c-peptide: (i) Clone and characterize the osteoclast membrane receptor for OIP-1; (ii) Identify OIP-1 interacting proteins using yeast two-hybrid system; (iii) Determine the effects of over-expression or blocking the expression of OIP-1 interacting proteins on OIP-1 capacity to inhibit OCL formation (iv) Determine the participation of OIP-1 interacting proteins in OIP-1 signaling to inhibit OCL formation; Aim (2) Determine if over-expression of OIP-1 in cells of OCL lineage inhibit osteoclast formation: (a) Develop TRAP-OIP-1 transgenic mice targeting OIP-1 expression in cells of OCL lineage to assess OCL development in vivo; (b) Determine if overexpression of OIP-1 in OCL precursor cells affects OCL differentiation and the status of RANKL signaling molecules during OCL differentiation in vitro; Aim (3) Isolate and characterize the OIP-1 gene promoter sequence for cytokine regulatory regions and potential transcription factors that module OIP-1 gene expression in osteoclasts. These studies should provide important insights into the regulatory mechanisms responsible for OIP-1 inhibition of OCL formation in the bone microenvironment and allow development of novel rational approaches and therapeutic agents to control enhanced osteoclast activity in Paget's disease and other bone diseases such as osteoporosis and multiple myeloma.